Manila: The Supreme Court (SC) on Wednesday provided clarification regarding the prescriptive periods for filing value-added tax (VAT) refund claims with the Bureau of Internal Revenue (BIR).
According to Philippines News Agency, the tribunal's Third Division ruled that for VAT refund claims filed before June 11, 2014, the 120-day period for the BIR to resolve these claims begins when the taxpayer determines that its submission of documents is complete. This decision arose from a case involving Dohle Shipmanagement Philippines Corporation, which sought a refund or credit for unutilized input VAT for the year 2012.
Dohle initially filed its administrative claim with the BIR on March 31, 2014, and later submitted additional supporting documents on July 28, 2014. Section 112 of the 1997 Tax Code stipulates that the BIR has 120 days from the taxpayer's submission of complete documents to decide on the administrative claim. In case the BIR denies or fails to act on the claim, the taxpayer has 30 days to file a judicial claim with the Court of Tax Appeals (CTA), known as the 120+30-day rule.
The BIR, however, contended that Dohle filed its judicial claim too late, arguing that the 120-day period commenced when Dohle initially filed its administrative claim on March 31, 2014, not when it submitted additional documents in July. Consequently, the BIR maintained that Dohle had until September 25, 2014, to file its claim with the CTA.
Nonetheless, both the CTA and the SC ruled in favor of Dohle, asserting that the 120-day period should start from July 28, 2014, when the additional documents were submitted. The SC emphasized that the 120-day period aims to benefit taxpayers by ensuring the BIR acts on claims in a timely manner. The court underscored that taxpayers determine when all documents are complete to start the 120-day period, facilitating quicker refund processing.
The SC further clarified that the 30-day period to submit additional documents under BIR Memorandum Circular (RMC) 49-2003 applies only when the BIR identifies an incomplete submission, not when taxpayers voluntarily provide additional documents. In Dohle's case, the SC concluded that the company timely filed its judicial claim with the CTA on December 23, 2014, after the BIR's inaction within the 120-day period.
Additionally, under RMC 54-2014, effective June 11, 2014, taxpayers are now required to submit all necessary documents when filing an administrative claim, and subsequent submissions are not permitted. Moreover, Republic Act No. 10963, known as the Tax Reform for Acceleration and Inclusion (TRAIN) Law, reduced the BIR's period to process VAT refund claims to 90 days from January 1, 2018.
The SC summarized the rules for filing administrative VAT refund claims under relevant RMCs and the TRAIN Law, delineating procedural timelines and requirements based on the claim filing date. For claims filed before June 11, 2014, and those filed from June 11, 2014, to December 31, 2017, specific guidelines on document submission and timeframes apply. Starting January 1, 2018, the BIR has a shortened 90-day period to resolve claims, and incomplete submissions are disallowed outright.
